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Lord Howell of Guildford: My Lords, the report is fascinating, but the phrase that the noble Lord has just used, which has been quoted very extensively by government Ministers, includes the thought that the balance of power will shift from the Commission to the member states. Does he mean to the European Council or literally to the member states themselves, to their executives and to their parliaments? Which does he mean?

Lord Grenfell: My Lords, the noble Lord has hit the nail on the head. The balance of power is shifting to the Council, the sovereign representatives of the member states of the European Union. We were referring in particular to the strengthening of the role of the Council, through a reform of the six-monthly presidencies and the election of a Council president for a once-renewable two-and-a-half year term. Clearly, the Government agree, as the noble Lord has rightly said, as their White Paper cites an earlier conclusion of ours and states that these reforms to the Council will:

You will see in the report before your Lordships that between May and October, when our report was published, we saw no reason to modify our earlier conclusion that power would be shifting from the Commission to the member states. But that was not quite the unanimous view of the committee with two members dissenting in a division on this point.

We concluded, on the other hand, that the draft treaty is far less successful in securing transparency or bringing the EU closer to the citizens. General public interest in EU affairs remains limited in this country. One has only to consider the number of people who take the trouble to vote in elections to the European Parliament. Nevertheless, the new treaty provisions investing the national parliaments with the task of policing the Commission's respect for the subsidiarity principle have the potential to contribute to a greater public engagement. Any objection by a national parliament would be widely seen as that parliament standing up for national interests.

That, of course, implies that the Government should do more to explain the draft treaty to the general public, as has already been mentioned by the noble Lord, Lord Howell. The White Paper is a good start, and Parliament at least is being well served by the time spent by the Foreign Secretary and the Minister for European affairs when they appear before the Joint Committee of both Houses on the IGC. Our report urged the Government to widen the remit of the European Strategy Committee which was set up to co-ordinate a Whitehall-wide focus on the benefits of membership of the euro, including informing the public about the EU in general. We are very satisfied that the Government have done so.

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The fourth test was whether the provisions of the draft treaty would make the European Union more efficient. We saw much in the draft that could have that effect to the extent that there were sensible proposals for the reform of institutions and for the simplification of the Union's working practices. In several important cases the question remains whether they will be agreed in suitable form at the Heads of State meeting in Brussels in 10 days' time. It really is important to get it right and that is why we concluded that the IGC should not rush to agree the treaty. Of course, it needs to be agreed in time for the accession of the 10 new member states next May and for the subsequent elections to the European Parliament in June. But it is no tragedy if it is not agreed by the end of the Italian presidency at the end of this month. It can be completed, if necessary, in the early weeks of the succeeding Irish presidency. That is a small price for getting it right, and Italy will still have its just reward with a signing of an eventually agreed treaty in its capital, Rome.

I turn now to a few of the high profile issues that remain to be resolved in the IGC and on which we had expressed our views in this report. On voting weights in the Council, a compromise could still be reached which could end the isolation of Poland and Spain on this point. Our Committee favoured the convention formula of a dual majority system consisting of the majority of member states, representing at least three-fifths of the Union's population, combined in the case of the common foreign and security policy with a two-thirds majority of member states. That simplified system clearly enhances the Union's democratic accountability, apart from being much more understandable. However, we shall have to live with the complex triple majority system agreed at Nice until 2009—that is one of the terms of the treaty—and Poland and Spain have been fighting to keep the Nice formula, which is more favourable to them, in place beyond that date.

Our Government appear to be gaining some support for their suggestion that the decision on the post-2009 formula not be taken now, but some time in the interim period. That may indeed become necessary, but it would be a bit of a cop-out. The weekend after next in Brussels is not too late for the IGC to be looking at sensible alternatives to the draft treaty's 50 per cent/60 per cent formula. Both a 50/50 formula or a 60/60 formula would increase the ability of the small and medium-sized member states to form a blocking minority.

On the size of the Commission, we do not see the draft treaty's proposal as an ideal way of seeking to enhance either the efficiency or the accountability of the Union. On balance, however, it is just acceptable, but we have urged the Government to explore alternatives. The upshot appears to be that we are moving inexorably towards a one-commissioner-per-member-state solution, at least for the time-being. An unwieldy Commission of 25 will do nothing to improve the efficiency of the European Union. And the question still remains whether some of the biggest members will accept that only if they get back their two commissioners, thus risking a Commission of 31.

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Last Monday when I put that to the Foreign Secretary in the Joint Standing Committee on the IGC, I was relieved to hear from him that Britain was not pushing for a reversion to its two commissioners, although I have to wonder whether that admirable intention can survive if other large members, who insist on their two commissioners, get their way as a condition of agreeing to one commissioner for each of the medium and smaller-sized states.

With respect to the creation of the post of Union "Foreign Minister"—a name that we and the Government dislike—we remain adamant, as do the Government, that that is essentially an inter-governmental post, and that if it has to be double-hatted with a vice-presidency in the Commission, it must be made clear beyond all peradventure that the office-holder is first and foremost accountable to the Council.

We share the Government's dismay that the Italian presidency has reverted to the earlier unacceptable proposition enshrined in Article III-201 that the Council of Ministers shall act by qualified majority voting when adopting a European decision on a proposal from the Union Minister for Foreign Affairs. As we insisted in our report, any implementing decision based on a proposal coming from the EU Minister must be preceded by a unanimous European Council request for such a proposal.

Our report also spoke out strongly against the proposed passerelle clause or the escalator clause as some prefer to call it which, despite its safeguards, could lead to the Council abolishing unanimity in certain areas without any substantive involvement of national parliaments. If the treaty were explicitly to list certain clearly defined areas where the passerelle could acceptably be applied, our objections might be removed. But it does not, and so it should be entirely eliminated. We hope that the Government will continue to seek that.

On one issue our report revises an opinion we had expressed in an earlier report on subsidiarity. We had originally favoured a "red card" to supplement, where necessary, the "yellow card" as a warning mechanism to the Commission where national parliaments feel it is abusing the subsidiarity principle. We now agree with the "yellow card only" proposal in the draft protocol. We feel that the existence of a red card might result in the yellow card being devalued and treated insufficiently seriously.

As it is topical, I have to deplore strongly the opportunity lost to reform the stability and growth pact in the course of the Inter-Governmental Conference. In anticipation of that failure—because we did anticipate it—our report suggested that the treaty might at least make express provision in specified articles for it to be amended by member states acting unanimously rather than by way of the formal treaty revision process. The noble Lord, Lord Radice, produced an excellent report on revising the stability and growth pact. If we can avoid going through the very long process of normal treaty revision, I hope that the kinds of excellent proposals and reforms he has advocated can be put in place without too much delay.

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Finally, perhaps I may ask a question of the Minister who is to reply. Are the Government now satisfied with the wording in Article I-40(7), the mutual defence clause?

I have taken much of your Lordships' time—and I apologise—but this is a very substantial report. I wish our Government well at the Brussels summit. There are still some very difficult problems to be solved and decisions to be made and it will not be easy. An enlarged European Union needs a good treaty; the British people will benefit from a good treaty. Let us hope that that can be achieved in Brussels. But, as I have urged, if more time is needed, it must be taken.

4.42 p.m.

Lord Norton of Louth: My Lords, I am conscious that there are 36 further Back-Bench speeches to follow mine. Perhaps I may therefore make myself popular with at least 36 Members of your Lordships' House by saying that I intend to keep my remarks fairly short.

Like the noble Lord, Lord Grenfell, I rise to address that part of the gracious Speech which refers to the negotiations taking place on the draft European treaty. That treaty has been the subject of extensive inquiry by the European Union Committee and the noble Lord, Lord Grenfell, has spoken to its most recent report on the subject.

The draft report has also been the subject of a specific inquiry by the Constitution Committee, which I have the honour to chair. We decided that it would be appropriate to consider the implications of the draft treaty for the British constitution.

One of the most important changes to our constitution was brought about by membership of the European Community in 1973. That had profound implications for the central tenets of the British constitution. The problem is that we have rarely stood back to look at the consequences of EC membership for our constitutional arrangements.

The motivations for joining the European Community were essentially economic and political. At the time of joining there was little appreciation of the full constitutional implications. It was only later, with some notable court cases in the 1990s, that the implications began to be more fully appreciated. The outputs of Parliament could be set aside—something that ran counter to the Diceyan doctrine of parliamentary sovereignty. Parliament had provided for this but the implications were never clearly discussed or embraced.

The constitutional implications of later treaties also were usually appreciated only after the event, notably so in the case of the Single European Act. In terms of grasping the constitutional implications of European treaties, it is a case of running in order to catch up. My view is that we still have a long way to go. The report of the Constitution Committee is designed to draw out the constitutional implications of the draft treaty and to ensure that they are recognised now rather than after the event.

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The committee invited a number of academics to contribute papers identifying the constitutional implications. We received some excellent responses and these are published as the written evidence. The committee has not sought to offer comments of its own. Rather, the report seeks to inform debate by identifying those parts of the draft treaty that have implications for the British constitution. As we make clear in our introduction, our report should be read in conjunction with the reports produced by other committees, especially those of the European Union Committee and the European Scrutiny Committee in the other place.

Our report is short but covers a substantial amount of ground. The fact that it is able to do so owes much to the work of our excellent legal adviser, Professor Anthony Bradley. The report draws attention to the most prominent provisions of the draft treaty before identifying concerns raised in the papers submitted to us.

As noble Lords will see from the report—my noble friend Lord Howell referred to this—we list 15 issues. We are not necessarily saying that the provisions of the draft treaty to which we draw attention will have an adverse—or a beneficial—consequence for our constitutional arrangements. We are drawing attention to the fact that they have implications for our constitutional arrangements and that we need to be clear as to what the implications are.

For those familiar with the draft treaty, some of the issues listed in the report will not come as a surprise—the new provision for the division of powers; EU framework laws; qualified majority voting; the Charter of Fundamental Rights; the new competencies of the Union; the provision for EU law to have direct effect in justice and home affairs; and the impact of powers embodied in the treaty on devolved areas and local government in the United Kingdom.

Paragraph 24 of the report is important for what it embodies and for its succinctness, but it cannot be read in isolation from the written evidence on which it draws. One has only to read the papers by Professor Anthony Arnull of Birmingham University and Sionaidh Douglas-Scott of University College, London to realise that—as ever—the devil is in the detail. The Foreign Secretary, in his letter to the committee, adopts a rather broad brush approach. The academic witnesses adopt a fine comb in going through the hefty document.

Time precludes a detailed analysis of each of the submissions, but perhaps I may group the concerns under three heads: those of confusion, limitation and omission.

In his paper, Professor McEldowney of Warwick University writes:

    "There is plenty of room for interpretation, particularly as there is such unnecessary vagueness . . . The powers granted under the draft Constitution are vague and ambiguous".

Professor Arnull's paper is especially persuasive in identifying those parts of the draft treaty that give rise to confusion and uncertainty. Examples relate to primacy, competition policy, the capacity for provisions of framework laws to be used to bring proceedings against

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private parties, and the relationship between the President of the European Council and the proposed Minister—or representative—for Foreign Affairs. Both he and Ms Douglas-Scott record the problem—it is a serious potential problem—in delineating clearly between rights and principles in the Charter of Fundamental Rights. Ms Douglas-Scott also notes that though the Union is required to "respect" the national identities of its member states and their essential state functions, it is, in her words,

    "not entirely clear what 'respect' means in this context".

In terms of limitation, I refer to the failure to provide more extensive provision for involvement by national parliaments, a matter also addressed in the EU Committee's report, to which the noble Lord, Lord Grenfell, has already referred. As he mentioned, there is provision only for what has been termed the "yellow card" mechanism, under which the Commission may be required to reconsider a matter, rather than the "red card" mechanism, under which national parliaments could refer a matter to the ECJ if their concerns over subsidiarity were not met. Under the proposed protocol on the application of the principles of proportionality and subsidiarity, action may be brought by a national government on behalf of the parliament but, as Professor Arnull notes, that is possible under the existing treaties. He sees no point in including in the treaty a provision that has no effect. He thinks that it should be replaced or amended to give effect to the "red card" procedure. In that respect he differs from the EU Committee.

In terms of omissions, there are various examples that could be taken. For reasons of time I shall mention only one. As Ms Douglas-Scott notes, the treaty is silent about who decides the boundaries of competencies.

There are thus important constitutional issues raised by the draft treaty. I have not even addressed the significant implications for criminal law dealt with by Ms Douglas-Scott in her paper, nor for devolution addressed by Alan Trench in his.

The noble Lord, Lord Grenfell, has already referred to the Government's response. In that response they have touched in passing on the concerns raised in our report. Where the report has most relevance for the Government is in relation to the analysis of the final text that the Government have promised to produce. In that, we need to have a clear statement of what the impact of the treaty will be on the constitution of the United Kingdom. If we know the implications before and not after the event, then that will constitute a major step forward.

4.50 p.m.

Lord Boyce: My Lords, I first thank the Minister and the noble Lords, Lord Howell and Lord Redesdale, for their very kind and generous words of introduction. It is certainly a privilege and an honour to speak for the first time in your Lordships' House and especially to do so in the debate following the gracious Speech.

I should like to take this opportunity to thank your Lordships for the general warm welcome I have received as I have surfaced here after 42 years in the

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Royal Navy. I very much look forward to contributing to your Lordships' deliberations at this interesting period of our history in domestic and foreign affairs, even if today such contribution needs to have some maidenly muting—I need to dampen expectations that may have been raised by previous speakers.

Perhaps I may start with foreign affairs. I begin my contribution to today's debate by commenting, from my perspective in my last appointment, on the relationship between defence and the Foreign Office and the product of that liaison, which is defence diplomacy. Excellent working relationships are in place here in London at the very highest level between diplomats and defence officials, both uniformed and civilian, and the strong trust and understanding that exists between those two departments, which enhances policy making and its implementation on both sides of Whitehall, cascades down to the coalface to bear fruit in such areas as the team effort in foreign missions, where we have nearly 500 people from defence deployed; or, as another example, to our teams from the three services in a number of countries conducting training and advisory tasks to contribute to the work being done by our embassies to raise the UK's profile and reputation.

The Minister also mentioned our joint efforts in Africa. All of this is largely unsung, but it is very important. I very much hope that every effort will continue to be put into seeing that this synergistic and symbiotic relationship is nurtured and developed.

While I am on this blurred edge between defence and foreign matters, your Lordships would not be surprised if I were to mention European defence—or perhaps they would, since I am required in this speech to be non-controversial. It is, of course, never my intention to be anything else.

However, I hope I do not venture into forbidden territory if I say that I have anxieties about where we are heading with respect to the relationship between NATO and the European Union; and I am particularly conscious of the words in the gracious Speech that the Government will work for a strong partnership between Europe and the United States, underpinned by NATO, a sentiment with which I totally agree. I strongly support any improvement in the defence capability of European Union nations, even if, in some cases, it seems a lamentably long time in coming, because it would undoubtedly be of ultimate benefit to NATO. But I would add that we must ensure that money raised under the banner of EU defence improvements is directed to where it will have sensible value; that is, towards fighting effectiveness.

On that note I turn to the United Kingdom's defence capability. Just over 12 years ago, in his maiden speech, the late Lord Fieldhouse—incidentally, I am not sure whether it is kind or careless of your Lordships to have allowed two submariners into this House—underlined the importance of our forces having mobility, flexibility and sustainability if they were to be able to respond effectively at short notice to whatever threat turned up. How right he was. Although some see these as fundamental components of maritime power—which

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they are—the way all three services have demonstrated these attributes in the past two to three extraordinarily busy years has been remarkable. It has allowed them to execute a series of highly successful operations—Sierra Leone, Macedonia, Afghanistan and Iraq, to mention the main ones.

So I look forward to the defence White Paper, which was trailed in the gracious Speech and earlier today, building on these capabilities without absconding from the responsibility of recognising the absolutely essential component of fighting prowess, and thus enabling us to continue to be able to deal with the expected; and what we expect, of course, the unexpected.

I imagine we will also see mentioned in the White Paper something of the new jargon which is appearing, such as "effects-based warfare", "digitised battlespace", "network-enabled capability" and so on. Your Lordships will get plenty of that in the future, so they will be pleased to hear that I shall not spoil their anticipation now. Suffice to say, these are actually all very important, and are vital to development.

However, they will have to be paid for; and, indeed, the increase of focus on capability and effects as opposed to platforms may see some advocating that there can be some reduction in the importance of front-line strength in numerical terms, thus potentially freeing up money. But even if one accepts that, it is important to realise that the evolving philosophy primarily applies to the single situation, warfighting scenario, since the capabilities being spoken of are those which are optimised at the high-intensity end of the business.

So we need to remember—and the noble and gallant Lord, Lord Guthrie, has already alluded to this—the low-intensity end, where we are for the vast majority of the time with our forces spread thinly around the world as they are today; that however clever the technology, it does not deliver the capability to be in two places at the same time, such as patrolling simultaneously in the Gulf and the south Atlantic. We have not yet cracked the fourth dimension. So, if there is to be a cut in frontline numbers, then no doubt we can also expect to see a cut in commitments. Anything else would be inexplicable to our already fully stretched servicemen and servicewomen.

Having mentioned our service people, I shall now conclude by saying something about them and their expectations. No one could possibly argue that they have performed other than exceptionally during the past few years. I have mentioned some of the operations where I would highlight, in particular, their extraordinary ability to switch almost instantaneously from intense warfighting to peacekeeping that was so well demonstrated in Iraq. It is as admirable as it is unique.

But we should not forget the many "normal business" activities that everyone tends to forget, such as duties in Northern Ireland or the Balkans, on strategic deterrent patrol in the Atlantic somewhere, on air defence standby in the Falkland Islands—and very many others—let alone the odd engagement with foot and mouth disease or firefighting tasks.

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So what do our soldiers, sailors and airmen expect? In short, they just want recognition for their efforts and sacrifice. By that I do not mean personal reward, although of course that is important, but recognition of what defence through their efforts does for the UK. By and large that happened recently in the last spending review, which was well received. But, given what our servicemen and women have done since then, I very much hope that the current budgeting round and the outcome of the next spending review will not leave them with any perception that they are not valued. I fear that we seem to be heading that way at the moment. Our servicemen and women are not just "among the best", which I have heard some people say; they are "the best". Let us keep them that way.

4.59 p.m.

Lord Astor of Hever: My Lords, it is a great honour for me to congratulate the noble and gallant Lord, Lord Boyce, on an excellent maiden speech. The Minister was right: we received a real treat. The noble and gallant Lord spoke with great authority, as one would expect following his distinguished naval career and his time as CDS. The House will welcome the further strengthening of defence expertise, especially of the Royal Navy, here. As the overall commander of our forces during the highly successful Iraq war, the noble and gallant Lord deserves congratulations from the whole House.

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